Three Essays on the Economics of Land Use and Water Quality

Abstract

Studies in natural resources economics apply different models ranging from a simple linear regression models to much more complex models requiring advance skills in Geographic Information Systems, statistics and computer programming to predict the effect of population and income on the demand for resources, to much more complex models requiring advanced skills in Geographic Information Systems, statistics and computer programming. The later kind of models are often developed and used to estimate the effect of human actions including land management practices on soil erosion, water quality and biodiversity. The results of such models have been instrumental in improving, among others, our understanding of causes of decline in environmental quality, formulating policies for pollution control, and conserving the natural environment.

This work, focused on water quality as a specific environmental quality indicator, demonstrates how different models can be applied to estimate the effects of (i) socioeconomic and demographic forces on land use distribution, (ii) land use distribution on water quality, and (iii) the value placed on environmental amenities.

This dissertation is divided into three essays. In the first, a multinomial logit model is used to estimate the effects of urbanization, demographic structure, personal income and spatial distribution of watersheds in the allocation of fixed proportion of land to developed, forest, agricultural and other land uses in a watershed. These results constitute a foundation for spatial and ecosystem models to predict long-term environmental impacts of land use change.

In the second essay, a simple bioeconomic model is used to determine how changes in land use distribution affect the water quality in a watershed. The BASINS-SWAT model is used to estimate environmental parameters, which will then be used in the economic model to examine optimal land use under environmental constraints. The results will inform policy decisions on land use in the watershed.

In the third essay, a hedonic model is applied to estimate the demand for public goods, including water quality, using housing market data from Ohio. The model derives implicit prices for neighborhood and environmental characteristics and estimates the demand for those qualities. This study estimates willingness to pay for individual house characteristic related to environmental quality, which helps environmental policy makers to assess the benefits and costs of environmental pollution control and streamline their resources.